To unlock the bad guys, do the following:
Berserker: complete Stage 1 of Subchapter 1 in Weapon Master Mode
Lizardman: complete all Stages of Subchapter 2 in Weapon Master Mode
Assassin: complete Stage 2 of Subchapter 3 in Weapon Master Mode
Yoshimitsu: complete Stage 3 of Subchapter 2 in Weapon Master Mode
Charade: complete Stage 1 of Subchapter 3 in Weapon Master Mode
Cervantes: complete Stage 4 of Subchapter 3 in Weapon Master Mode
Sophitia: complete Stage 5 of Subchapter 4 in Weapon Master Mode
Seung Mina: complete Stage 3 of Subchapter 6 in Weapon Master Mode